Exam ICWIM Topic 1 Question 55 Discussion
Actual exam question for CISI's ICWIM exam
Question #: 55
Topic #: 1
Question #: 55
Topic #: 1
It is impossible to diversify against:
Suggested Answer: D Vote an answer
Market risk, also known as systematic risk, affects the entire market and cannot be eliminated through diversification. Examples include economic recessions, geopolitical events, or market-wide changes in interest rates.
* Currency risk (A): Can be diversified through exposure to multiple currencies.
* Credit risk (B): Can be mitigated by spreading exposure across various credit profiles.
* Liquidity risk (C): Can be addressed by diversifying into liquid assets.
References:
* International Certificate in Wealth & Investment Management: Types of risk and strategies to mitigate them.
* Modern Portfolio Theory and the distinction between systematic and unsystematic risk.
* Currency risk (A): Can be diversified through exposure to multiple currencies.
* Credit risk (B): Can be mitigated by spreading exposure across various credit profiles.
* Liquidity risk (C): Can be addressed by diversifying into liquid assets.
References:
* International Certificate in Wealth & Investment Management: Types of risk and strategies to mitigate them.
* Modern Portfolio Theory and the distinction between systematic and unsystematic risk.
by Cynthia at Feb 05, 2025, 03:57 AM
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